The World Bank Office, Romania
ROMANIA WEEKLY UPDATE
Wednesday February 4 , 2004
The material published in this newsletter is compiled by the World Bank's Bucharest office and staff in Washington, and on the basis of publicly available information. It does not
represent the opinion of the World Bank or any other official body. No responsibility for factual accuracy can be taken
Ten companies total 50 percent of debts to state
budget
Ten big taxpayers total over half of the debts to the
state budget, according to Romanian official sources.
The biggest debtor is Petromidia Refinery, with
20,000 billion lei (613mn USD), followed by Rafo
Onesti Refinery with 7,500 billion lei (230mn USD)
and the lignite and pitcoal extracting companies, with
6,000 billion lei each (184mn USD). The Government
plan to cut the overall arrears by 5 percent this year.
Bucharest Stock Exchange (BSE) reaches
record-high capitalization
For the first time since the establishment of the stock
market, the total worth of the companies listed on the
Bucharest Stock Exchange (BSE) exceeded $4bn. Of
all the companies listed on the Bucharest Stock
Exchange, the biggest capitalization is held by SNP
(National Oil Company) Petrom – with 1.7bn$,
Romanian Development Bank (BRD) - with almost
one billion dollars, aluminum plant Alro Slatina 220mn$ and Banca Transilvania - 160mn$. The BET
index, which monitors the evolution of the top ten
companies has climbed 10.2% since late last year, the
market's general index BET-C went up 9.3%, whereas
the average growth posted by the financial investment
companies (SIFs) reached almost 13 percent.
All investors interested in Distrigaz Sud and
Distrigaz Nord natural gas distributors are
certified.
Letters of interest for Distrigaz Sud and Distrigaz
Nord, the natural gas distributors, have been submitted
by Gazprom of Russia, Gaz de France, Ruhrgas of
Germany, Enel of Italy and Wintershall of Germany.
All the investors interested in submitting bids for
Distrigaz Sud and Distrigaz Nord natural gas
distributors were validated by the privatization
commission. Under the privatization strategy, the
bidders are expected to submit preliminary bids,
negotiate with the Privatization Agency (APAPS) and
then submit final bids. Gazprom, Gaz de France,
Ruhrgas and Enel have submitted letters of interest for
Distrigaz Sud and Distrigaz Nord, while Wintershall
has chosen to go for the latter one, according to
Romanian official sources.
IMF mission will arrive in Romania in early
February
An IMF mission is expected to arrive in Romania in
early February to continue discussions with the
Government on a precautionary agreement, according
to PM Adrian Nastase. Officials of the ruling PSD
expressed expectations that a deal could be reached by
April. The key outstanding issues outlined during the
November 2003 IMF mission were: the enterprise
arrears to the state and social insurance budgets;
keeping the CA deficit below 5% of GDP in 2004;
privatization of Petrom oil company by the end of
March 2004; privatization of two electricity
distributors in 2004; further downsizing the mining
and railway sectors; curbing the growth of consumer
credit; adjusting utility prices towards cost-recovery
levels; and tighter wage growth control.
Sale of 25% stake in BCR to EBRD and IFC
might be completed this month.
The sale of 25% of BCR to EBRD and IFC might be
fully completed by the end of the month, when the
investors would pay USD 222mn, according to the
Romanian media. The financial forecasts for the
following three years have reportedly been agreed
upon, while more technical documents on the bank's
governing have been drafted. Under the financial
projections, the stock of credit extended by BCR is
expected to increase by a real 21% this year, 16% in
2006 and 10% in 2007, after the 47% advance in 2003.
BCR is the largest country's lender, with a rough 32%
market share.
Current account deficit significantly up
The deficit of the current account of the balance of
payments stood at Euro 2.5bn at end November (or
some 5% of the projected full-year GDP), up by
84.9% year-on-year, according to the National Bank
of Romania, and it is likely to exceed 6% of GDP at
year-end. The trade balance deficit (GNFS) stood at
Euro 3.39bn, up by 41.6% year on year.
11m
2002
11m
2003
y/y %
change
Current Account,
-1351 -2499
84.9
(net, in mn Euros) ,
o.w:
GNFS 1
-2396 -3395
41.6
Goods
-2435 -3414
40.2
Income
-488
-589
20.6
Current transfers
1533
1485
-3.1
Capital & Financial
2025
2618
29.2
Account, ow:
Foreign direct
953
1198
25.7
investment (FDI)
Net errors and
-674
-119
omissions
1) Goods and Non Financial Services
FDI has financed roughly half of the CA deficit last
year, while the portfolio investments accounted for
one third - with the borrowing adding to 100%. A
broader picture shows however the current transfers
(wages earned abroad mainly) as financing some 45%
of the trade deficit and staying for the second year at a
remarkable EUR 1.5bn. Medium and long-term
external debt stepped up 4.1 percent versus end-2002
and stood at EUR 15,248mn at end-November 2003.
Public and publicly guaranteed external debt
amounted to EUR 9,679 million at end-November
2003, accounting for 63.5 percent of the medium- and
long-term debt against 62.7 percent at end-2002.
Private external debt added 1.8 percent from end-2002
to EUR 5,569 million.
Additional information can be found at www.bnro.ro